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ECN and NDD in Forex
And so, we have: NDD, ECN, STP, IntegralFX, Currenex, LavaFX, etc. to figure out which is which, start with the top of the iceberg, from the very broad notion, realizing that it will be possible to appeal to other participants in the examination.
Let's start with the abbreviations NDD, which means No Dealing Desk (no Dealer intervention). NDD is directly connected to the Forex trader and financial market.
NDD systems are divided into:
• STP (Straight Through Processing – straight through processing)
• ECN (Electronic Communication Network electronic communication network)
STP broker sends the orders to buy and sell to the interbank market without intermediaries, which allows us to provide instant execution of trades. In this case the broker may have access to one, and to several banks - the more the number, the better the conditions for the execution of trades for clients of the broker.
This model does not imply a conflict of interest between client and broker is STP, because they don't play against each other. All orders of customers are automatically redirected to the liquidity provider and the broker receives a Commission on transactions.
In the ECN, in addition to the above, merged into a single market without intermediaries, allowing you to get the best quotes on trade deals.
In fact, ECN is an automated trading system that is designed for the information of a purchase requisition from sales order. If the client's request is not reflected in the counterparty's system, the ECN displays its best bid and offer in the NASDAQ system. As soon as someone puts a counter-application in the system operation occurs with orders placed in the ECN.
The system ECN objectively good, since it automatically carries out the execution of customer orders. The human factor is completely absent.
All trades with ECN are displayed directly in the system that is running the broker, so there is no concept of platform and whether the client is a scalper or a scalper completely indifferent. To work on the interbank market need to provide a large enough liquidity,because an ECN broker is forced to provide due to the number of transactions, not volume. For ECN accounts special requirements, such as minimum transaction volume, can hardly descend lower than 0.1 lot and leverage does not exceed 1:100.
The spread is formed only by the participants of the system, without exaggeration broker. The client receives the data feed from the system in the form in which it shapes the market, i.e. without smoothing broker like we used to see on standard trading accounts. A certain disadvantage of this solution is just the same, not the exact execution of orders, because only in DC can exist guaranteed warrant (option). In fact, we can observe a situation when the spread can change significantly, and the counterparty for our application can be somewhat worse price than we expected.
ECN system can provide automated broker, instantly fulfilling our requests. All orders sent via ECN, influence the dynamics and are displayed on the market.
ECN or a marketing ploy
Connection to the ECN client software may than happy to use brokers, creating their own trading platform. In addition to the specific development of the brokers have the opportunity to use the MetaTrader4 platform, which is one of the most popular at the moment. Thereby customers do not have to study the capabilities and features of other platforms, going for the standard account of the broker in an ECN account. However, in this case the client devoid of "depth" that must be present in the ECN system.
Now most of the dealing centers declare that they are able to provide ECN accounts. However, after reading their terms, we will see that and provide leverage 1:500 and a minimum expense of $ 100, and the minimum allowable lot 0.01. Most likely, such conditions are provided by normal dealing center, availing themselves of the ECN brand. The largest ECN-systems Currenex, LavaFX, Integral and others. For example, among participants in the system Integtal you can mention Bank of America, Citigroup, UBS, Barclays, etc d and rpm Currenex has exceeded 1.5 trillion.dollars a day, which is almost half of the total turnover of the Forex.
Conclusion: ECB-brokers do not play against their clients, they earn exclusively from the fee (not to be confused with a spread), which is deducted for every transaction. There are certain conditions for ECN accounts, which do not allow to speak about availability of the same ECN as a classic account or a cent account. Trading
On ECN account, the trader will never face requote, his trades will be executed very quickly, and prohibitions on trading techniques available. If You are more important than precise execution at a fixed price, fixed spreads, greater leverage and the presence of transactions of small volume, ECN accounts will not work.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 331
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